Post Covid-19 Economic Boom: How Should Startups Act
There’s a huge opportunity for startups and the whole tech industry but, as usual, you must act fast if you want to take advantage.
Covid-19 keeps raging across poorer countries but the rich world seems to be on theverge of a post-pandemic boom and 2022 economic projections are looking bright. The latest IMF and World Bank reports show a global economic boom gatheringsteam.
After 2020, the global economy is projected to grow by 6% in 2021, powered by strong growth in the US and China, which are forecast to grow by 6% and 8%, respectively. The IMF is also projecting an even stronger recovery for the global economy in 2022.
“This shock has been so brutal and so harsh that everyone is rethinking and reconsidering,” Christine Lagarde, the head of the European Central Bank, told the Washington Post on July 22, 2020. She predicted an “acceleration of transformations,” and a global economy that’s more green, more digital and has tighter supply chains. Let’s focus on the “more digital” aspect of this new global economy.
New startups are being born and businesses are pivoting
Markets are pushing companies to adapt or die. This has given a clear opportunity for startups and entrepreneurs. Many industries have experienced a boom even during 2020. It seems obvious but I believe it’s interesting to point this out once more: e-commerce has grown two to five times faster than before the pandemic.
According to McKinsey reports, many of the consumers driving that growth were new to online transactions and were pushed by the pandemic to make a digital transition. Plus, reports suggest that these behaviors are likely to stick post Covid-19.
Also, the Financial Times reports, citing official state statistics, that a boom in entrepreneurship in many countries has been recorded. In the US, in July 2020 the number of applications for starting a business reached its all-time highs of 551,657 an increase of 95% compared to the same period in 2019, according to the Census Bureau. In France, 84,000 new businesses were registered in October, according to McKinsey. This is a historical maximum and a 20% increase from the same month in 2019.
People expect businesses to solve Covid-19 problems
These numbers are probably stimulated by people being laid off from their jobs and trying to find a way to survive to the pandemic. This might make people feel that the future is bleak but the truth is there’s a great chance that at least the digital and tech industries strive during 2021 and 2022. VCs are being founded, startups are growing fast and people expect brands to act as a powerful force for change.
The 2020 Edelman Trust Barometer reveals that none of the four societal institutions that the study measures—government, business, NGOs and media—is trusted. The cause of this paradox can be found in people’s fears about the future and their role in it, which are a wake-up call for our institutions to embrace a new way of effectively building trust.
The time has come for businesses to act, solve problems and keep building trust among consumers. The top-down models have turned bottom-up, consumers are demanding brands to take action on societal problems and represent them. People are giving businesses the power and capitalism and technological change are more accelerated than ever.
How should startups act?
The post Covid-19 economic boom implies a huge opportunity for startups. Founders, entrepreneurs and investors need to take risks, interact with their audiences, upgrade their products, work on their branding, test their ideas fast and keep moving to take advantage of the whole economic, political and cultural context.
- Think about the problem you are trying to solve and how your ideas interact with this problem. How will it evolve in the future? Why are you working on this? Is it really relevant?
- Analyze your audience’s behaviors. What are they consuming? Where are they spending their free time? Where do they procrastinate?
- Posting TikToks is not a communication strategy. Define a communication strategy.
- A logo and a color palette is not branding. Define your branding strategy.
- Don’t waste a lot of time or money on anything you haven’t tested yet. Build prototypes, take them to real users, make sure you are making someone’s life a bit easier or at least more entertaining.
- Look for talent globally. Expand your frontiers. After hours and ping pong tables don’t work as perks any more. You can offer a competitive salary and remote work to talented people living overseas.
- If you are looking for funding, look for the right partner. Try to find investors that share your values and vision. This will make things much more easier.
The pandemic marks a turning point for economies. You need to rush, take risks and, at the same time, have a solid strategy.